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Take advantage of today’s super rules - before they change on 1 July 2017

The 2016 Federal Budget included a number of measures intended to improve the equity of the superannuation system. Most were designed to ensure tax concessions and benefits are available to the people who need them most, but some may have detrimental impact on people who are relatively well-positioned for retirement, like many BlueScope Steel Super members.

Rules affecting transition to retirement and contributions are set to change on 1 July 2017. These changes are likely to limit the tax-effectiveness of large pre-retirement super contributions and transition to retirement strategies.


Applicable to everyone

From 1 July 2017, the existing annual non-concessional contribution cap will be reduced from $180,000 to $100,000.
The Government had previously announced it was removing the annual cap in favour of a proposed retrospective lifetime limit of $500,000 but this was not passed. So if you’re under 65, you can still bring forward three years’ worth of after-tax contributions, which means you can contribute up to $300,000 in a single year until your balance reaches $1.6 million (see below).

From 1 July 2017, the concessional (pre-tax) contribution cap will be reduced to $25,000 a year for everyone, down from $35,000 for people aged 50 and over, and $30,000 for people under 50 in 2016/17.


If you’re nearing or in retirement

From 1 July 2017, there will be a $1.6 million cap imposed on the total amount of superannuation that can be transferred to a tax-free superannuation pension account.

From 1 July 2017, the investment earnings of transition to retirement pensions will no longer be tax-free. A concessional (pre-tax) rate of 15% will apply from this date. You can still use transition to retirement to work less or save more, but the tax benefits will change.

From 1 July 2017, more people aged 65 to 74 will be able to make non-concessional (after-tax) superannuation contributions personally or for their spouse, with the removal of the ’work test’. The ’work test’ is the current requirement for people aged 65 to 74 to have worked for at least 40 hours over 30 consecutive days in the financial year they wish to make a contribution.


If you’re a lower income earner

From 1 July 2017, people earning up to $37,000 per year will receive an automatic Low Income Superannuation Tax Offset capped at $500 per year. The offset will mean that lower income earners will receive a refund into their super account of the tax paid on their concessional (pre-tax) superannuation contributions, up to a cap of $500.

From 1 July 2017, people with super balances under $500,000 will be able to ’carry forward’ any unused concessional (pre-tax) contribution capacity for up to five consecutive years.

From 1 July 2017, all people under age 75 will be able to claim a tax deduction for non-concessional (post-tax) super contributions.

From 1 July 2017, more people will be able to claim a tax offset for contributions made to their spouse’s super. The income threshold for eligibility has been increased to $37,000 per year.


If you’re a higher income earner

From 1 July 2017, a higher tax rate of 30% on concessional super contributions will be paid by people earning $250,000 per year. The higher rate currently applies if a person’s income exceeds $300,000.


A direct line to policy influencers

We know many BlueScope Steel Super members are uncomfortable with constant changes to superannuation legislation. Through the Fund’s administrator we’re able to promote the needs and interests of our members with a direct line to policy influencers.

The Fund’s administrator has senior representation on all major superannuation industry committees and with the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Tax Office (ATO) and other regulatory bodies.

In this way, the Fund is able to stay close to industry and regulatory policy as it is developed, and lobby decision makers to ensure your voice is being heard.


For answers, advice or information about your super, call SuperConnect on 1300 130 434.

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Disclaimer Issued by Total Risk Management Pty Limited (ABN 62 008 644 353 AFSL 238 790) as Trustee for BlueScope Steel Superannuation ABN 42 459 430 081.